KUALA LUMPUR, CIMB Securities Sdn Bhd is projecting the fiscal deficit to narrow to 3.8 per cent of gross domestic product (GDP) in 2025 from an estimated 4.3 per cent this year, with the growth in government revenue expected to outpace operating expenditure (opex). The brokerage firm said opex is forecast to increase by 3.1 per cent year-on-year (y-o-y) to RM316 billion in Budget 2025, which is scheduled to be tabled on Oct 18. This is against a steady development expenditure (DE) budget of RM90 billion as the government maintains a focus on long-term infrastructure and development projects. 'Meanwhile, government revenue is projected to rise by 4.6 per cent y-o-y to RM326 billion in 2025, supported by a solid GDP growth, the expansion of e-invoicing coverage, and stronger personal income tax collection due to a higher minimum wage and low unemployment,' it said in a research note. CIMB Securities added that progress on subsidy rationalisation is expected to result in a higher current surplus of RM11 bil lion next year (2024: RM6 billion) and a narrower fiscal deficit of RM78 billion, or 3.8 per cent of GDP (2024: RM83 billion or 4.3 per cent of GDP). 'Past instances of a high current balance projection in the original budget have coincided with fiscal consolidation efforts, such as in 2010 and 2015. However, the actual current balance has tended to be smaller due to higher outlays on opex at the expense of DE,' it noted. It also noted subsidy rationalisation remains central to the budget strategy, with mitigation measures that include targeted cash transfers, civil servant salary hikes and a higher minimum wage, reflecting the MADANI government's commitment to addressing the cost of living and sustaining economic growth. The firm also highlighted proposals to broaden the revenue base, including the expansion of e-invoicing coverage, a global minimum tax of 15 per cent, a tax on sugar-sweetened beverages, and a multi-tier foreign worker levy mechanism. Source: BERNAMA News Agency